5. Making financial plans

Transcription

1 5. Making financial plans

2 Why financial plans are important Making decisions about leaving your money and possessions (assets) is an important part of planning for the future. If you are able to leave something for your relative with a learning disability, this could provide them with additional choices and flexibility in their life and enable them to spend money on things as their needs change. This should be done in a way that will be recognised in law rather than relying on a friend or relative to informally put it in place. The following information only provides an overview of what you may want to consider; there is more detailed information in the publications listed at the end of the section. It is recommended that you get additional advice from a legal professional who specialises in this area of work in relation to disabled people. This section looks at: making a will; discretionary trusts; leaving your property in your will; disabled persons trusts; lifetime trusts; appointeeship and suitable persons. 59

3 Making a will This checklist sets out the different things you need to think about: What you want to achieve in your will Choosing a solicitor Choosing your executors Choosing your trustees What you want to achieve in your will You need to start by thinking about what you own in terms of money and possessions, either broadly or in detail. If you want to look at it in detail, it may help to make a list and then decide what to leave to whom. There are various options: Leave everything to one person. Leave everything to one person except some itemised gifts. Divide everything between two or more people. When you are dividing things you need to decide on the share/ percentage you wish to allocate to each person. It is also helpful to think about what you would want to happen if the people in your will died before you (this can be covered in what is sometimes called a catastrophe clause ). Choosing guardians Making gifts What you want to happen with everything you own Funeral arrangements Letters of wishes 60

4 Choosing a solicitor It is best to get the advice of a solicitor to draft a will. You need to find a solicitor who has experience and knowledge of drawing up wills and setting up trusts for families with a disabled relative. You could ask Mencap for their list of specialist legal professionals who have this knowledge (see contact details at the end of this section) or you could ask other family carers or local carers groups whether they know of a local person. When you phone a solicitor, ask if they are familiar with preparing wills that look after someone with a learning disability and their fee for doing this. If the solicitor is familiar with this kind of work, they should be able to give you a quote there and then. If they are hesitant, it may indicate that they do not have enough experience of this type of work and you should therefore look for someone else. You should feel confident that they understand your requirements. If you feel you might be more comfortable talking to a solicitor at home, ask whether they will make a home visit and if there is any additional charge for this. A home visit could give the solicitor the opportunity to meet your relative this could be beneficial when drafting your will. Choosing your executors An executor is a person you officially choose to make sure the wishes in your will are carried out. Their role is to find out what there is in money terms, check if there are any outstanding debts, apply for a grant of probate, collect any money or assets and pay debts and then deal with your estate as set up in your will. You can choose up to four executors, but two are usually sufficient. You need at least two if you are setting up a trust and the executors are also going to be the trustees. The combination of people will depend on your circumstances. They can be family, friends, colleagues or professionals, but it is a good idea if at least some of them are younger than you and geographically close. It is also advisable to include a solicitor if a significant amount of money is being left. Choosing your trustees Trustees are responsible for looking after any trust that arises in the will; this could be a discretionary trust (see definition below) or a trust for any children under the age of 18. Your executors can also be the trustees; it s advisable to include someone who knows your relative well. If you have set up a circle of support (see Section 3: Building friendships and social networks), you could ask circle members to be trustees and, in addition, select a solicitor (or another professional such as an accountant). When asking people if they would like to be a trustee you should explain that it needs to be both a long-term and an active commitment: there is no point your relative having resources in a trust if the money doesn t get spent. It is important to have at least one trustee who is not also a beneficiary of the trust. Choosing guardians If your relative is under the age of 18 you may want to think about choosing guardians who would look after them until they reach the age of 18. You would need to discuss this in detail with anyone you were considering appointing. If you have set up a trust, guardians need to understand the role of your trustees in managing the trust for the benefit of your relative. If you do not appoint guardians yourself, the Court of Protection would be involved in doing so, should the need arise. 61

5 Making gifts Making a will gives you the opportunity to leave special things to your relative; this could provide them with precious memories of their family and family life and give them a sense of connection with their past (see Gathering memories in Section 4: Talking about difficult subjects). They could be items such as photographs, jewellery, objects or furniture from your home. You could talk to your relative about it and ask what is special to them. Everything not left as gifts is sold with the house and the proceeds are put into the estate. You might want to leave something to people whose friendship you have valued or to an organisation or charity that you have been involved with. These can be gifts of money. What you want to happen with everything you own When you are thinking about how to leave your estate, you may find it helpful to start by considering who you are morally obliged to. Most married couples want to provide for the spouse who is left. If there are likely to be inheritance tax issues, it is advisable to get professional advice. Your next consideration is how your estate is to be divided after the death of the surviving spouse. You can divide it into however many shares or percentages you want. If you have other children without disabilities, you may want to consider their needs (for example how financially independent they are) before deciding on the percentages to leave to different people. It is not advisable to ask another person to look after the share bequeathed to your relative with a learning disability: it can lead to arguments between family members and a possible failure to carry out your wishes. If your relative with a learning disability is receiving local authority funding or means-tested benefits, you need to protect their inheritance by setting up a trust with your will. If you do not leave a reasonable amount to your relative, your will could be open to a challenge from the local authority and you would need to be able to provide a good reason for your decision. Funeral arrangements Your executors are responsible for organising your funeral; family members can also be involved if they are not the executors. Whoever organises your funeral needs to know what your wishes are. In a letter of wishes that goes with your will (see definition below) you can give any instructions for your funeral, including your preference for burial or cremation, your preferred location for the scattering of ashes, details of the ceremony and how you would like your relative to be involved. It may be a good idea to discuss your funeral plans with your relative, as it may help them to cope better at the time, especially if they have little or no experience of funerals. Your relative may like to contribute to the planning: for example, at a Christian funeral they could select a hymn or reading. Letters of wishes A letter of wishes is a way in which you can give instructions and guidance on your affairs. It is not a legal document so there is no guarantee that it will be followed: it is important that you choose executors whom you trust to act on your wishes. However, because it is not a legal document, it is easier and less costly to update as and when circumstances change. 62

6 Discretionary trusts A discretionary trust can be used to ensure money, property or investments are protected so that they are still available for your relative. It involves the legal transfer of the assets to trustees who then have a discretion (choice) as to how to deal with these assets. The discretionary trust would need to name more than one beneficiary but this can be achieved by naming a group of people that would include your relative. Trustees decide which of the beneficiaries receives help from the trust using the guidance you have left in your letter of wishes (it is important to choose trustees whom you believe will respect your wishes). Discretionary trusts are worth considering because they can be used as a way to: leave an inheritance to your relative; set up a group of people to manage your assets (money or property) for your relative; prevent your relative from losing means-tested benefits and care funding from being stopped. For both purposes, the trust can be set up to be used in your lifetime (see lifetime trusts below) or in your will for your relative to inherit after your death. In a letter of wishes you can tell the trustees how you would like them to use the money in a discretionary trust to benefit your relative with a learning disability. The money can be used for anything that the local authority would be unlikely to fund, such as holidays, equipment and additional support, as long as this does not set up a pattern of regular payments as the Department for Work and Pensions or the local authority could argue that it was income and take it into account when carrying out a financial assessment. In the letter of wishes you could say that you would like the trustees to involve your relative in discussions about how the money is used. There are two ways of using a discretionary trust: To own, manage and look after a property; To give money that can be used to pay for things that would not otherwise be affordable for your relative. 63

7 Leaving your property (house) to your relative in your will You may wish to leave your house or flat to your relative with a disability with a view to them having their own home. A number of problems might arise if you leave it to them directly rather than in a trust: The value of the house will usually be included in any assessment for means-tested benefits or local authority funding and this may lead to your relative losing their rights to benefits and funding if they should need residential care in the future. The Care Act proposed new ways long-term care fees would be paid for but this has now been put on hold for a number of years. They will also need income to be able to run and maintain the house. This may not be a problem if there is enough money in the inheritance to cover these costs, but usually it is helpful to have trustees who are responsible for managing payments for maintaining the property. Some parents try to get around these problems by leaving their property to another son/daughter and asking them to make sure that their disabled sibling has a place to live. This arrangement would not affect their benefits but it could lead to awkward situations between non-disabled siblings and there is no guarantee that a non-disabled sibling would carry out your wishes. Their family or financial situation might change over time and they might need to sell the property. Lifetime trusts If your relative already has an amount of money, say, from an inheritance from a grandparent, or if you wish to put money aside in your lifetime, it can be put in a lifetime trust. Provided that the amount put into the trust is not more than the tax rules allow, it can be topped up, for example with birthday and Christmas money. A lifetime trust can be a discretionary trust and would therefore name several beneficiaries. You would need to appoint at least two trustees to look after the assets (money or investments) that you put into the trust. It would be up to the trustees to decide how to use the assets, but you could prepare a letter of wishes setting out how you would want your relative to benefit. You should take specialist advice before setting up a lifetime trust. Disabled persons trusts This is a special type of trust that can be created for or by a person with a disability but it is more restricted in the way it can be operated than a discretionary trust. There are also detailed rules relating to disabled persons trusts and taxation so if you are considering this form of trust you should talk to a solicitor. Discretionary trusts are usually viewed as being more suitable for someone with a learning disability. Putting the property into a trust is a way around these problems. The trustees could either keep the house as part of the trust or sell it and buy somewhere more appropriate for your relative to live. For further information about leaving property in a trust, see the Housing Options booklet listed at the end of this section. 64

8 Appointeeship and suitable persons If a person has been assessed as lacking capacity to manage their money and receives benefits, the Department for Work and Pensions can appoint someone to take responsibility for managing this income. If you are the appointee for your relative, you should think about who would take over this role should you no longer be able to carry out your responsibilities (which are to sign claim forms, notify the DWP about any changes affecting how much your relative can claim, ensure the money is spent in their best interests and to notify the DWP if you stop being appointee.) To avoid the probate process blocking access to money that is relied on, you can set up an account with more than one signatory. The joint account should not hold an amount that will bring the savings a person with learning disabilities has access to above the lower capital limit for means-tested benefits (currently 6,000 but this may change in future financial years: you can check at ) You could also find out whether there is a local organisation, such as a Centre for Independent Living, that could take over the payroll, timesheets and any other responsibilities to keep your relative's support system running smoothly. Many older family carers arrange to give up appointeeship if they have a younger relative who could take up this role. In this way, they avoid a situation where their relative could be left without benefit income whilst a new appointeeship is set up. This could take several weeks. New applications can be accompanied by a letter from the original appointee which explains their wish to stop being appointee when/if the new applicant is authorised. If you are acting as the 'suitable person' to manage a direct payment on behalf of your relative, the local authority will generally require you to have a separate bank account to handle this funding. If you are holding funds or contributing financially to a support package in any way, remember that if something happens to you, accounts in your name will be frozen and the money stops being available (for example to pay towards support workers, bills or for daily shopping). 65

9 Questions to ask Are there any local solicitors who could provide advice about making a will and discretionary trusts? Whom to ask Phone Mencap Direct on or ask other local families. Notes 66

10 To find out more you could look at For further information about house ownership and discretionary trusts, see Mencap, Wills and trusts: leaving money to someone with a learning disability. Mencap provides a list of specialist legal professionals in local areas. You can request this list and other publications about financial planning on the website. 67